[Federal Register Volume 68, Number 49 (Thursday, March 13, 2003)]
[Notices]
[Pages 12115-12116]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-6067]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47449; File No. SR-ISE-2003-08]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the International Securities 
Exchange, Inc., Relating to Fee Changes

March 5, 2003.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on February 26, 2003, the International Securities Exchange, Inc. 
(``Exchange'' or ``ISE'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission'') the proposed rule change as 
described in Items I, II, and III below, which items have been prepared 
by the ISE. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing changes to its Schedule of Fees regarding 
complex orders. First, the Exchange proposes to charge its regular 
execution fees only on one leg of the complex order (as opposed to 
charging on each leg). Second, the Exchange proposes to waive all such 
execution fees for complex orders through June 30, 2003. Below is the 
text of the proposed rule change. Proposed new language is in italics.
* * * * *

                                              ISE Schedule of Fees
                                            [Electronic Market Place]
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                                    Amount
          Execution fees              ($)        Billable unit          Frequency                 Notes
----------------------------------------------------------------------------------------------------------------
Customer.........................      0.05  contract/side.......  Transaction........  Fee waived through June
                                                                                         30, 2003.
Facilitation.....................      0.15  contract/side.......  Transaction........  ........................
Market Maker & Firm Proprietary    ........  ....................  ...................  For Complex Orders,
 (including members of other                                                             charged only for the
 exchanges executing Linkage                                                             leg of the trade
 transactions, except                                                                    consisting of the most
 Satisfaction Orders).                                                                   contracts; Firm
                                                                                         Proprietary fees for
                                                                                         trades executed in the
                                                                                         Block Order Mechanism
                                                                                         and for all trades in
                                                                                         the iShares S&P 100
                                                                                         Index Fund waived
                                                                                         through May 31, 2003;
                                                                                         fees for Complex Orders
                                                                                         waived through June 30,
                                                                                         2003.
A.D.V. Less Than 300,000.........      0.21  contract/side.......  Transaction........  Based on Exchange A.D.V.
A.D.V. From 300,001 to 500,000...      0.17  contract/side.......  Transaction........  Based on Exchange A.D.V.
A.D.V. From 500,001 to 700,000...      0.14  contract/side.......  Transaction........  Based on Exchange A.D.V.
A.D.V. Over 700,000..............      0.12  contract/side.......  Transaction........  Based on Exchange A.D.V.
----------------------------------------------------------------------------------------------------------------

* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of, and basis for, the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is proposing changes to its Schedule of Fees regarding 
complex orders in an attempt to provide its members with an incentive 
to execute complex orders on the Exchange.

[[Page 12116]]

    The Exchange currently applies its regular execution fees to 
complex orders. Because these trades generally are effected on low 
margins, the imposition of the regular execution fees may render some 
trades uneconomical. Accordingly, the Exchange proposes to charge its 
regular execution fees only on one leg of the complex order (as opposed 
to charging on each leg). Specifically, the Exchange would charge a fee 
on the leg with the most contracts.
    For example, if there is a simple two-legged spread to buy 100 
contracts of one series and to sell 100 contracts of another series, 
ISE would charge a fee for 100 contracts. In a three-legged trade of 
100 contracts, 50 contracts and 50 contracts, ISE also would charge a 
fee for 100 contracts. In a complex trade with both an option and a 
non-option leg, ISE would charge a fee for the option leg.
    In addition, the Exchange is proposing to waive all execution fees 
for complex orders through June 30, 2003.
2. Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(4) of the Act that an exchange have an 
equitable allocation of reasonable dues, fees and other charges among 
its members and other persons using its facilities.\3\
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    \3\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received from Members, Participants or Others

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from members or other interested 
parties.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change, which establishes or changes a due, fee 
or other charge imposed by the Exchange, has become effective pursuant 
to Section 19(b)(3)(A) of the Act \4\ and Rule 19b-4(f)(2) \5\ 
thereunder. At any time within 60 days of the filing of such proposed 
rule change, the Commission may summarily abrogate such rule change if 
it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.
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    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 19b-4(f)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying in the 
Commission's Public Reference Section. Copies of such filing will also 
be available for inspection and copying at the principal office of the 
ISE. All submissions should refer to File No. SR-ISE-2003-08 and should 
be submitted by April 3, 2003.

For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-6067 Filed 3-12-03; 8:45 am]
BILLING CODE 8010-01-P